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Goldman hangs back as Ferrovial bids for BAA

Goldman Sachs is understood to be waiting for shareholder reaction to Spanish construction company Ferrovialâ€™s hostile Â£8.75bn (â‚¬12.5bn) bid for BAA, the UK airports operator, before it decides whether to trump the offer.

The US investment bank recently raised an $8bn (â‚¬6.6bn) infrastructure fund to buy airport and seaport operators. The bankâ€™s hunger for a deal is thought to have increased after it dropped a Â£5.37bn bid last month for ITV, the UKâ€™s biggest commercial television company.

Comment: BAA shareholders could be forgiven for thinking the Ferrovial team has spent too long in one of its departure lounge bars because there does not seem to be much in the offer.

Ferrovialâ€™s offer, launched last Friday, surprised the markets because it was at the same price as a non-binding offer made three weeks ago. Rafel del Pino, chairman of Ferrovial, described the 810p-per-share offer as â€œunilateralâ€? rather than hostile. Ferrovial and its consortium partners were immediately rebuffed by BAA, which controls airports in the UK and abroad.

Comment: Rather than rush to decide on its real valuation of BAA ahead of the UK Takeover Panelâ€™s April 24 deadline, Ferrovialâ€™s formal offer buys it more time.

Ferrovial may bolster its consortium by recruiting three more partners over the next few weeks. The Spanish group said it was prepared to offer up to 10% of its share of the consortium to one or more new investors.

Its bid will be financed by a banking syndicate comprising Citigroup, Royal Bank of Scotland, Banco Santander, HSBC and Calyon. The consortium already has two other members: CDP, a Canadian pension-fund investment group; and GIC, the private equity investment arm of the government of Singapore.

BAA has drawn up secret plans to hand back large quantities of cash to shareholders in the event of a higher hostile offer, fearing that Ferrovial or a rival group could return with a bid closer to 900p per share. It has prepared plans for a special dividend of up to Â£1bn to keep shareholders happy.